By Teresa Rivas

The Dow dropped 126.79 points, or 0.8% to 14,994.92. It lost ground on Monday as well, making this its longest losing streak of the year. The S&P 500 also lost 0.8%, falling 13.6 points to 1616.53; the Nasdaq, the only index to end in the black at all this week, on Monday, was off 36.52, 1.1%, to 3,400.43.

While investors were optimistic this morning, but the rally quickly lost steam, and markets were losing ground before noon. Asian markets fall and European markets also gave up early gains, closing down.

With sparse economic data out today, markets continue to fret over the possibility that the Federal Reserve and other central banks will begin to pull back their stimulus spending, which has been a boon to stocks. In addition, many analysts have been expecting more volatility after equities rose almost uninterrupted since the start of the year.

“While we believe this decline has further to go in time, and maybe even magnitude, we continue to look upon it as an uncomfortable metamorphosis from a liquidity led bull market to a fundamentally driven one that will ultimately lead to even higher highs before the year is out,” writes S&P Capital IQ Chief Equity Strategist Sam Stovall. The firm recently increased its 12-month target for the S&P 500 to 1780 from 1670.

Monthly retail sales figures and jobless claims come out tomorrow, which should paint a clearer picture of the U.S. economy.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.